Mortgage Rates Keep Climbing While Foreclosure Filings Rise

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This week in the housing market saw the continued upswing in mortgage rates mirrored by a rise in foreclosure filings and a spike in search engine inquiries from sellers trying to offload their properties.

On the Mortgage Front

Freddie Mac (OTCMKTS:FMCC) reported the 30-year fixed-rate mortgage averaged 5.89% as of Sept. 8, up from last week when it averaged 5.66%. The 15-year fixed-rate mortgage averaged 5.16%, up from last week when it averaged 4.98%.

And the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.64%, up from last week when it averaged 4.51%.

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“Mortgage rates rose again as markets continue to manage the prospect of more aggressive monetary policy due to elevated inflation,” said Sam Khater, Freddie Mac’s chief economist.

“Not only are mortgage rates rising but the dispersion of rates has increased, suggesting that borrowers can meaningfully benefit from shopping around for a better rate.

Our research indicates that borrowers could save an average of $1,500 over the life of a loan by getting one additional rate quote and an average of about $3,000 if they get five quotes.”

While mortgage rates kept rising, mortgage applications were down for the fifth straight week, remaining at their lowest level in 22 years.

The Mortgage Bankers Association’s Market Composite Index for the week ending Sept. 2 dipped by 0.8% on a seasonally adjusted basis from the previous week while the unadjusted basis was down by 2%. The unadjusted Refinance Index decreased by 1% from the previous week and was 83%

“Mortgage rates moved higher over the course of last week as markets continued to re-assess the prospects for the economy and the path of monetary policy, with expectations for short-term rates to move and stay higher for longer,” said Mike Fratantoni, MBA senior vice president and chief economist.

“With the 30-year fixed rate rising to the highest level since mid-June, application volumes for both purchase and refinance loans dropped. Recent economic data will likely prevent any significant decline in mortgage rates in the near term, but the strong job market depicted in the August data should support housing demand.

There is no sign of a rebound in purchase applications yet, but the robust job market and an increase in housing inventories should lead to an eventual increase in purchase activity.”

On the Homeownership Front

Last month saw a total of 34,501 U.S. properties with foreclosure filings, according to new data from ATTOM. This is up 14% from the previous month ago and up 118% from a year ago.

Lenders started the foreclosure process on 23,952 properties last month, up 12% from July and up 187% from August 2021. Nationwide one in every 4,072 housing units had a foreclosure filing in August 2022.

States with the highest foreclosure rates were Illinois (one in every 1,926 housing units with a foreclosure filing); Delaware (one in every 2,387 housing units); South Carolina (one in every 2,417 housing units); New Jersey (one in every 2,441 housing units); and Florida (one in every 2,950 housing units).

“Two years after the onset of the Covid-19 pandemic, and after massive government intervention and mortgage industry efforts to prevent defaults, foreclosure starts have almost returned to 2019 levels,” said Rick Sharga, executive vice president of market intelligence at ATTOM.

“August foreclosure starts were at 86% of the number of foreclosure starts in August 2019, but it’s important to remember that even then, foreclosure activity was relatively low compared to historical averages.”

The Data & Analytics division of Black Knight Inc. (NYSE:BKI) reported the annual home price growth shifted from deceleration to decline in July as the median home price fell 0.77% from June – the largest single-month decline since January 2011.

More than 85% of the 50 largest U.S. markets are at least marginally off their peaks through July, and more than one in 10 seeing prices fall by 4% or more.

"After 31 consecutive months of growth, home prices pulled back by 0.77% in July," said Graboske. "Annual home price appreciation still came in at over 14%, but in a market characterized by as much volatility and rapid change as today's, such backward-looking metrics can be misleading as they can mask more current, pressing realities."

"Similarly," Graboske added, “while mortgage-holders' tappable equity had grown 25% from last year to hit yet another record high in Q2, we noted that equity actually peaked in May and tracked the pullback that began in June before escalating in July.

Tappable equity is now down 5% in the last two months, setting up Q3 to likely see the first quarterly decline in tappable equity since 2019."

And as the housing scene shifts away from being a sellers’ market, more sellers are seeking input online to offload their properties.

The luxury real estate platform RubyHome shared an analysis of Google (NASDAQ:GOOG) (NASDAQ:GOOGL) search data reveals that found searches for “sell my house” were up by 147% in the U.S.. as of July 2022 - the highest level in American Internet history.  for America.

The top ten states searching to sell their house the most are Mississippi, Connecticut, Virginia, Wyoming, Florida, Iowa, New Mexico, North Carolina, New York and Kentucky.